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Do you know who Ernesto Fajardo is? Well, you should! If you have already applied under the Startup Visa program to Canada or are planning to, then you should know his name. He is the one person inside the IRCC (Canadian immigration department) that designed and created this Startup Visa program from scratch. That’s right! In this article we’re going to cover the key factors for you as an existing or future potential applicant to the Canadian Startup Visa Program. Good or bad, the truth needs to be told!
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The Startup Visa program is for innovative, scalable businesses which have the potential to bring economic benefit to Canada. Don’t mix it up with ‘starting a business’ in Canada. The Startup Visa program is not for restaurants, real estate, warehousing, manufacturing, or professional service businesses unless there is an innovation involved. The Startup Visa program allows new business concepts or innovations and existing businesses to apply to move to Canada. It’s simple, pitch to a designated organization such as an incubator, angel investor, or venture capital on the IRCC list, receive a letter of support, apply for your PR with an optional work permit, and run your business until IRCC makes a decision on your file.
A lot of applicants think that incubators, angel investors, and venture capitals are free. They assume that there are fees involved when you apply under this program. In certain cases, if the incubator or the VC’s/Angel Investors see that you already have revenue and excellent potential, they will issue a commitment certificate for your Startup Visa group, but the investment won’t be paid out until all group members become PR in Canada. Most incubators have fees, and so do VC’s and Angel Investors. If you’re in advanced stages of your Startup with revenues, an excellent business model and IP, then it’s possible that you give up small equity in your company for a Letter of Support, or if you’re not in this position you would need to pay the designated organization fees. There are only very few rare incubators that don’t want anything in return.
The processing times are still quite stable at 32 months on the website. Here is what we know so far as of September 5th, 2022, from IRCC based on discussions with our Startup clients, other lawyers, and consultants, and incubators & VCs:
IRCC is not processing the applications in order. With the older applications submitted we are seeing groups that submitted their PR in the summer of 2020 being reviewed now with the letters being sent out asking how the co-founders came up with the business concept, details, and documents regarding their registered Startup business inside Canada, how the co-founders know each other, progress report on their Startup business, as well as potentially asking what regulatory & licensing requirements are needed to run their business inside Canada, validation of their updated research on why this business is viable in Canada, and updated family & travel information as well as financials. The letter can be a combination of these questions and no 1 letter is going to be the same.
IRCC has also started processing some 2021 Startup Visa applications, and from one incubator we heard that a group that had applied for their PR in October 2021 was just approved. There is also some sequential processing being done by the IRCC which is at mid of 2020 applications, in addition to the random selection of 2021 groups which are not sequential. If you applied in 2022, then your PR will take at least 2.5 years to process. However, you can obviously enter the country within an average of 6 months with a work permit.
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Here is what else we know: IRCC does not like it when you have a full-time job somewhere else, and you are NOT working on your Startup business. If you are employed full-time at another company not related to your Startup in your home country and waiting for your PR to be approved before you enter Canada, be aware.
If somebody else is on the Intellectual property application (i.e. IP) besides the main applicants in the Startup Visa group, IRCC will have lots of questions for you. They want to see full control over the IP and assets by the main members migrating to Canada under this program. This is a potential red flag for them.
They want to see you working on the Startup business and seeing real traction. Again, if you’re just waiting around and paid for a Letter of Support, are doing nothing on your business, and you do not have a PLAN B exit strategy to PR like our Hybrid Startup clients, then you’re in trouble unless you’re good friends with Justin Trudeau and even if so, you’d probably be refused anyways.
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We spoke with one of the incubators, which is pumping out a lot of Letters of Support, and so far, as of August 2022, they have 36 IRCC-approved companies either for PR or work permits under the Startup Visa program which is 15% of the total number of Startup groups which were supported by this incubator. Out of this number, 21 groups landed with work permits and 15 landed with PR. Many groups as you know do not apply for work permits which is why the figure is so low, and some are waiting for the work permits to be processed.
We’re seeing some members of Startup Visa groups of other firms abandoning ship. This means they are already in Canada with a work permit or maybe even a study permit, and either they or their spouse has a chance of converting to PR through another program and they are taking this and withdrawing from the Startup groups. If they are an essential member, the entire group is by default canceled and refused. If they are not an essential member, then it won’t affect the group. If you’re a single founder, like our clients in the Hybrid Startup Visa category, then you’re safe. We expect this trend to continue in the next 12-18 months as processing times remain slow and applicants become frustrated.
We did a video earlier this year on our YouTube channel predicting what could potentially happen to this program over the next 1-2 years (i.e. the changes in the Startup Visa Canada program). However, when speaking with other legal representatives very active in this field, some are of the school of thought that the IRCC will scrap this program altogether and close it for good. This could happen in 1 year, sooner or even later. This is just their opinion based on what’s currently happening with this program. Each lawyer we speak with has at least 5 Startup Visa appeal cases in Federal court and one even has over 20.
The simple truth is that if the IRCC doesn’t have enough resources, manpower, and time to redesign and supervise this program, which seems to be the case, then they’ll just shut it down. We still have hope that they will just make changes instead, but with the way IRCC is processing visitor visas, PRs, study permits, and so on, we don’t see much hope with all the delays and backlog. Remember, even if they hire thousands of new employees a year to process this backlog, these people need training! Don’t forget the simple fact that you are dealing with the government here, not a private entity.
If you haven’t applied yet for the Startup Visa program to Canada, consider this, there are a multitude of other programs available to apply which may be more transparent and have a clearer outcome for you. Other countries are welcoming Startups much faster like UK, Portugal, or Spain. And if you are a single founder, you can always apply under our Hybrid Startup program, which is unique to INGWE.
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If you’re thinking about immigrating to Canada through Studies, Work, Sponsorship, or Business, you’re at the right place! We can guarantee only 1 main point; you will know what to expect, the entire process clearly laid out for you, all the risks identified, and where we can provide 100% support to you as our client. No surprises, just results! Get a FREE assessment with us, click here.
